A bill to make gold and silver legal tender in Maine and exempt it from sales tax is hanging on by a thread. But supporters see it as a way to siphon some of the multimillion-dollar coin trade show business away from neighboring New Hampshire.
The bill got only paltry committee support — four out of 13 members — as it headed to the House, where it was rejected Thursday by a 79-69 vote. It could come up for a vote in the Senate on Tuesday.
The bill would make gold and silver in coin or bar form legal tender for all transactions as long as the buyer and seller agree on the fair market value. The measure would also allow the possession of any amount of gold or silver in coin or bar form and exempt the sale of gold or silver for legal tender from the sales tax.
Maine dealers like the bill, which is sponsored by Rep. Thomas Longstaff, D-Waterville.
Adam Patterson, owner of Timeless Treasures in Hallowell, told lawmakers that passage would give Maine residents the opportunity to purchase locally instead of out of state.
“This would, in turn, allow Maine businesses to stay in business and grow,” he told the Committee on Labor, Commerce, Research and Economic Development during a hearing.
James Simmons, owner of M.A. Storck Coin and Stamp Co. of Portland, agreed that the bill would entice Mainers to buy and sell locally. He told the committee that a few consumers pay the sales tax, but most seek tax-free options.
“Five years ago a customer made a gold purchase of $100,000. The next day he returned and demanded a refund after reading his sales receipt and noticing that he was paying $4,761.90 in taxes. Almost every day we lose bullion sales because of the sales tax,” Simmons said in his testimony.
Supporters say Maine is out of the mainstream on the tax issue as 30 states have no tax on bullion purchases. And some of those who spoke in favor of the bill during a legislative hearing defended it as a hedge against devalued currency in a time of fiscal uncertainty.
The House debate was short, with only Rep. Jonathan Kinney, R-Limington, taking the floor.
“The state of New Hampshire has a trade show every month, of coins and bullion, with at least one show a year that brings folks in from all over the country,” Kinney said. “Coin and bullion shows have been shown to generate revenue that ranges from $7 million to $20 million a show.
“Maine is considered Vacationland. I firmly believe people would rather travel to Portland, or many other great locations in our state, for a trade show than Manchester, N.H. Maine will never have a coin trade show as long as we charge sales tax for these investments.”
Opponents didn’t join in the debate, but the House chair of the labor committee, Rep. Erin Herbig, said allowing one tax break opens the door to others.
“Sales tax exemptions are a very slippery slope,” said Herbig, D-Belfast.
Longstaff’s bill doesn’t appear to be causing shivers in New Hampshire.
“I don’t really know that it would have much of an impact,” said Rick Hurst, owner of Weare Gold and Coin Shop. “It’s not going to affect me at all. Most of my business is local.”
Hurst said the Maine bill, should it pass, might draw gold and silver traders from Massachusetts.